‘Impending plasticide’: Emergency tax tipped as waste crisis deepens

Australia’s waste crisis is tipped to deepen, with global wealth manager Credit Suisse predicting the federal government will intervene within two years with policies such as an emergency tax on plastic.

It predicts a build-up of illegally dumped or landfilled waste in Australia – coupled with much stronger consumer awareness – is likely to result in a “more active federal response by financial year 2020/21”.

Credit Suisse says this could include an emergency tax on virgin resin (plastic which has never been processed or used before), tariffs on imported plastic goods, bans on single-use plastics and tax incentives for products with recycled content.

The federal government is poised to announce six national targets – including the diversion of 80 per cent of waste from landfill by 2030 – to tackle the crisis precipitated by China’s import restrictions on recyclables.

It has also pledged that all packaging will have 30 per cent recycled content by 2025.

Credit Suisse says given Australia’s historical reliance on China, which has imported an average of 81 per cent of Australia’s plastic waste over the past decade, there is a new-found urgency and the government’s new waste strategy represents a major shift in strategy.

But it says the long lead time from policy approval to implementation is highly problematic, particularly for new waste infrastructure.

“A common analogy that goes around is that you can get approval for a coal mine in Queensland quicker than you can for a materials recycling facility. It’s unbelievable, it’s like five years,” says Credit Suisse research analyst Phineas Glover.

The report says: “To curtail the situation in the short term, it is a matter of when, not if, we see reactionary policy measures.”

Credit Suisse says its analysis of global policy indicated a shift towards serious consideration of resin taxes. (This would make new plastic more expensive for manufacturers to purchase.)

“If you look at the surveys, people are more concerned about plastics than climate change in Australia,” Mr Glover said. “People really seem to support much more meaningful reform around plastics.”

Credit Suisse believes the policy for all packaging to have 30 per cent average recycled content will have to be supported with tax incentives. (In France, products without recycled plastic packaging will cost up to 10 per cent more from 2019.)

The Credit Suisse report analysed the impact on publicly listed Australian companies of policy measures, such as a resin tax, GST on non-recycled packaging and broader bans on single-use plastic. (All states except New South Wales have banned – or will ban – single-use plastic bags.)

It predicts Coca-Cola Amatil, which uses plastic in both its primary packaging (bottles and cups) and secondary packaging (shrink-wrapped packs), would be among the hardest hit by a tax on plastics and recycled content requirements.

Mr Glover said Woolworths and Coles were likely to push back against Coca-Cola passing on increased costs.

“They are not going to increase the price of a bottle of water. We had some feedback to the effect Coca-Cola Amatil would have to cover a significant proportion of [any additional] cost in resins.”

Meanwhile, the report says the waste management sector, especially Cleanaway, would be the clear beneficiaries of the overall national waste strategy, with a large increase in demand for infrastructure.

It said some market consolidation was likely in the short term, given the impact of the China bans, which would benefit the larger companies.